Chapter 12:

Global Marketing Channels and Physical
Distribution

Overview

• Supermarkets and convenience stores comprise just two of the many elements that make up distribution channels around the globe.  The American Marketing Association defines a channel of distribution as “an organized network agencies and institution that, in combination, perform all the activities required to link producers with users to accomplish the marketing task”.

• Distribution channels are one of the most highly differentiated aspects of national marketing systems. Retail stores vary in size from giant hypermarkets to small stores in Latin America called pulperias. 

• The diversity of channels and the wide range of possible distribution strategies and market entry options present challenges to managers responsible for designing global marketing programs. Channels and physical distribution are crucial aspects of the total marketing program; without them, a great product at the right price and effective communication means very little.

Chapter Overviews, Outlines, Sample Questions

1. Introduction to Global Marketing

2. The Global Economic Environment

3. Regional Market Characteristics and Preferential Trade Agreements

4. Social and Cultural Environments

5. The Political, Legal, and Regulatory Environments

6. Global Information Systems and Market Research

7. Segmentation, Targeting, and Positioning

8. Importing, Exporting, and Sourcing

9. Global Market Entry Strategies: Licensing, Investment,
   and Strategic Alliances

10. Brand and Product Decisions In Global Marketing

11. Pricing Decisions

12. Global Marketing Channels and Physical Distribution

13. Global Marketing Communications Decisions I: Advertising
    and Public Relations

14. Global Marketing Communications Decisions II: Sales Promotion,
    Personal Selling, Special Forms of Marketing Communication

15. Digital Revolution

16. Strategic Elements of Competitive Advantage

17. Leadership, Organization, and Corporate Social Responsibility

Lecture Outline

Discussion Questions
 

1.

In what ways can channel intermediaries create utility for buyers?
 

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2.

What factors influence the channel structures and strategies available to global marketers?
 

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3.

What is cherry picking? What approaches can be used to deal with this problem?
 

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4.

Compare and contrast the typical channel structures for consumer products and industrial products.
 

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5.

Identify the different forms of retailing, and cite an example of each form. Identify retailers from as many different countries as you can.
 

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This figure shows a matrix-based scheme for classifying global retailers.

IKEA and other retailers in quadrant A typically use extensive advertising and product innovation to build a strong brand image.  

In quadrant B, the private-label focus is retained, but many more product categories are offered. Private label retailers that attempt to expand internationally face a double-edged challenge: They must attract customers to both the store and the branded merchandise.

Retailers in quadrant C offer many well-known brands in a relatively tightly defined merchandise range. This type of store tends to quickly dominate smaller established retailers by out-merchandizing local competition and offering customers superior value by virtue of extensive inventories and low prices.

Retailers in quadrant D offer the same type of merchandise available from established local retailers. What the newcomers bring to a market is competence in distribution or some other value chain element.

6.

Identify the four retail market expansion strategies discussed in the text. What factors determine the appropriate mode?

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The four strategies include organic, franchise, chain acquisition, and joint venture. The combination of factors affecting choice of mode is shown in the matrix: culturally close/easy to enter; culturally close/difficult to enter; culturally distant/easy to enter; culturally distant/difficult to enter.

7.

Many global retailers are targeting China, India, and other emerging marketing.  In terms of the strategies described in Figure 12-4, what would be the most likely entry strategies for these countries?

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8.

Briefly discuss the global issues associated with physical distribution and transportation logistics. Cite one example of a company that is making efficiency improvements in its channel or physical distribution arrangements.
 

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9.

What special distribution challenges exist in Japan? What is the best way for a non-Japanese company to deal with these challenges?

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Test your knowledge
 

Nestlé is using an innovative approach to distribution in Brazil with a program which consists of selling its products via:

1.

door-to door selling in low-income neighborhoods.

True

2.

upscale supermarkets.

True

False

3.

  True

  False

Distribution channels for automobiles in Japan and the United States are similar in that most car buyers in both countries visit dealerships before making a purchase.

4.

  True

  False

Supermarkets and convenience stores comprise just two of the many elements that make up distribution channels around the globe.

Sales representatives in which Japanese industry cultivate close, long-term relations with customers by selling door-to-door?

5.

automobiles.

True

6.

soft drinks

True

False

7.

  True

  False

The first channel alternative for manufacturers is to market directly to buyers via the Internet.

Which of the following most accurately describes the relative length of consumer and industrial distribution channels?

8.

Consumer channels tend to be longer (consist of more intermediaries) than industrial channels.

True

9.

Consumer channels tend to be shorter (consist of few intermediaries) than the industrial channels.

True

False

10.

  True

  False

E-bay pioneered a form of online commerce known as p-to-p or peer-to-peer marketing whereby individual consumers market products to another individual.